Loan To Value Ratio - main factors you need to consider

Loan To Value Ratio - main factors you need to consider

The Loan to Value Ratio (LVR), also known as Loan To Value (LTV), is a financial term used by Lenders to express the ratioof a loan to the value of an asset to be used as mortgaged security.

Most Lenders will apply a maximum LVR of 70% for commercial property purposes. Unlike residential lending, where a borrower can opt to purchase mortgage insurance to offset the risk to the lender when borrowing greater than LVR of 80%, commercial property borrowers can not.

Some borrowers contribute cash, leveraged equity and / or offer additional mortgage over other property security for the 30% or more required to complete transaction.

Typically, borrowers with high LVR ratios are generally seen as higher risk and, therefore, if the mortgage is approved, the loan generally costs the borrower more via higher interest rates. Conversely, if borrower has a low LVR, the lenders risk is lower and therefore a lower interest rate can be achieved.

There are many factors that may mitigate lenders risk such as asset location, tenancy profile, cashflow, ability to service interest costs, strength of borrower / guarantor etc.

TIPS

The main factors you need to consider:-

1)   How you contribute the 30% equity into the purchase  - cash, leveraged equity or additional mortgaged security

2)   How do you obtain the best Interest Rate outcome – have clear mitigants

Craig McGregor of my mortgage manager commercial  has over 27 years experience in Corporate & Business Banking. He has expansive knowledge and experience across many industries such as accommodation, accounting, construction, earthmoving, franchising, hospitality, legal, manufacturing, medical, property, real estate, transport and wholesalers.   

Craig has worked with many businesses to provide strategic direction, undertake negotiations with existing and/or alternative financiers to structure and/or restructure debt, pricing for risk and maximising the return on investment.

Projects Craig has been involved with include:-

-      Twenty8 on Gordon, Coffs Harbour – development of commercial offices
-      Westpac Harbour Drive, Coffs Harbour – development of commercial offices
-      Ex-Raine & Horne, Harbour Drive, Coffs Harbour – purchase investment
-      Allambie Apartments, Coffs Harbour – purchase investment
-      City Square, 66-90 Harbour Dr, Coffs Harbour – purchase development
-      Brad Pearce Dental, Coffs and Woolgoolga – development construction
-      The Dental Centre, Coffs Harbour – re-development
-      30 Orlando Street, Coffs Harbour – investment
-      29-33 Orlando Street, Coffs Harbour – development of commercial offices
-      78 Victoria Street, Coffs Harbour – 8 unit development residential
-      7 Fawcett Street, Woolgoolga – 8 unit development residential

The business, my mortgage manager has established a loyal client base due to its delivery of proactive strategic management, excellent service and outstanding results. 

Contact details:-

Craig McGregor
Dip FMBM
Commercial Manager

 
  Insight    ::    Vision    ::    Action    ::    Results         

0421 090 812 | craig@mymortgagemgr.com.au | www.mymortgagemgr.com.au

Craig McGregor is an Authorised Representative (ACR #483334) for the provision of credit services. CMAC Finance  Pty Ltd atf CMAC Trust tas My Mortgage Manager is an Authorised Representative (ACR #432095) for the provision of credit services. 

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